Morning Dairy Comments, 04/04/2016

Monday, April 4, 2016

General Market News

· NZ dairy prices expected to fall further during tomorrow’s GDT auction

· Crude oil prices heading lower after release of Iran export data

· Biggest ever Saudi overhaul targets $100 billion if revenue

· CDFA set April 11th hearing to reconsider whey value in milk pricing



Class III, Cheese & Dry Whey

The spot cheese market showed further stability on Friday after Thursday's silence. Blocks were bid up 1 cent to $1.47 on 2 trades and barrels ticked up ¼ cent to $1.455 on 8 trades. The session finished with 1 bid in both blocks and barrels with no offers. The Class III futures showed some consolidation after Thursday’s brisk rally. Class III futures traded 1,444 times as open interest increased by 383 contracts suggestion some longs liquidating.

Although inventories of cheese in the Midwest have been high it seems that it is moving at these prices. Cheese demand is said to be strong in the retail and food service sectors. Cheese in the $1.40’s probably pencils out well for promotional campaigns. Also buyers may be gearing up for the summer grilling season demand. See below, the Restaurant Performance Index stood at 102.1 in February up 1.5% from the January level. 

Dairy Market News prices for dry whey notched slightly lower last week as the central mostly sits at 24.13 cents and the western mostly is 24.5 cents. AMS prices last printed up 1.6 cents to 24.51 cents on lower volume of 6.5 mil pounds. Selling pressure emerged after the AMS prices were released on Wednesday.

Class III, Cheese and Dry Whey are opening mixed.


Spot Session Results











UP 1







UP 1/4







UP 1/4   







UP 1/2 




Class IV, NFDM & Butter

The nonfat dry milk market was quiet Friday as a 71 ¾ cent bid was left unanswered on spot. Futures trading was uneventful as 22 contracts traded paled in comparison from Thursday’s 400+ volume session. Traders will have plenty of fresh information to digest tomorrow. We have the GDT, exports, and the dairy products report out on the same day.

Tomorrow’s GDT will feature 10,725mt of WMP up 8.2% from prior event, and 4,630mt of SMP up 35% from prior event.

We are now just 5,251mt short of the original 109,000mt ceiling on Intervention for 2016. The increase of Intervention volume to 218,000mt has been approved but has not yet come into effect. This leaves us in a situation where we will most likely move to the tendering process after the 109,000mt are filled and our view here is that the EU will continue to buy product at very close to the Intervention level until the increased ceiling has been implemented.

The Dairy Market News Western Mostly NFDM price was down 0.62 cents from the previous week at 73.63 cents per pound. Last week’s CA Weighted Average price was 75.11 cents, up 0.68 cents from the previous week. AMS prices came in up 0.3 cents to 74.49 cents on 18.6 mil pounds down from the 26 mil levels we have seen in the previous week.

Butter showed more strength on Friday as spot was bid up ½ a cent to $1.96 on 1 trade with 2 bids and 1 offer standing. Butter futures were firm with 117 trades and open interest increasing by 67 contracts. The holiday retail buying is done and now bulk butter is being churned to go into inventory. Its reported food service demand is still strong, and retailers are looking over the horizon to secure print butter needs for later this year. 


NFDM, Butter and Class IV are opening mixed.


Two sided trade on Friday as the market digested Thursday’s USDA’s Quarterly Stocks and Prospective Plantings Report. Will the 93.6 mil acres for corn hold into the final acreage is the question. The funds may have overextended themselves as they were estimated on selling 40,000 contracts off Thursday’s report. Interesting if you look at the Commitment of Trader’s report below the funds (yellow line) added over 17,000 longs as of last Tuesday March 29th. Soybeans were up roughly 8 cents on Friday as the trade may be buying back some of the 5.6 million acres going into corn. Please see a visual perspective of both corn and bean perspective plantings below complements of our KC office.




Corn is trading 2-3 lower and Soybeans 2-3 higher this morning.


Unless otherwise noted, the posts on this blog should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. or its subsidiaries. INTL FCStone Inc. is not responsible for any trading decisions taken by persons viewing this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. or its subsidiaries. Reproduction without authorization is prohibited. All rights reserved.

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